23 September 2002 Ailing asset management software vendor Peregrine Systems has finally filed for Chapter 11 bankruptcy protection. At the same time, Peregrine also announced the sale of its Remedy help-desk management software subsidiary to systems management specialist BMC Software for $350 million (€355.2m).
Peregrine said that it had sought bankruptcy protection as a result of its inability to report audited financial statements dating back to 2000. The company has admitted overstating its revenues by $250 million (€253.7m) between April 1999 and December 2001. Peregrine’s Chapter 11 filing excludes all of its subsidiaries, including those outside of the US.
BMC has agreed to pay Peregrine $110 million (€111.7m) immediately for its purchase of Remedy, a supplier of help desk software. This money will help Peregrine to repay some of its debts and help fund the company’s financial restructuring.
For BMC, Remedy’s help desk software will help it to flesh out its systems management software offering. BMC’s software monitors the state and performance of operating systems and applications across a corporate network, while Remedy’s help desk suite sends suggested fixes to help resolve software problems that occur. BMC will gain about 700 employees as part of the deal.
Peregrine acquired Remedy for $1.09 billion (€1.1bn) in August 2001. This was just one of a rag-bag group of companies that Peregrine bought for nearly $3.5 billion (€3.6bn) – mostly in stock – between 2000 and 2001. These included electronic data interchange (EDI) software supplier Harbinger; IBM’s Tivoli Service Desk suite; and integration software company Extricity.
Analysts derided this strategy, particularly its move for Harbinger and Extricity. In June 2002, Peregrine sold off its supply chain enablement division – which included both the Harbinger and Extricity technology – to private equity investor Golden Gate Capital in a cut-price deal intended to give ailing Peregrine vital working capital.
Meanwhile, Peregrine has said that it is to file suit against several divisions of accountancy firm Arthur Andersen and other unnamed defendants over allegations they “were negligent, engaged in fraud and breached their audit and accounting duties and responsibilities” when they audited Peregrine’s accounts.
Arthur Andersen LLP in the US, Arthur Andersen Germany, Arthur Andersen Worldwide and Daniel Stulac, the audit partner on the account, have all been named in the lawsuit. Peregrine is seeking damages in excess of $250 million (€253.7m) for each of the “four causes of action in the complaint”.